Refi poll

[SecondCor521]

Hi all,

Currently have about 140 payments left on a 15 year fixed at 4.625% via Pen Fed.

I looked at refinancing to the Pen Fed 10 year fixed at 3.25%, but I have a small enough balance (~$150K) to where the closing costs make it not worth bothering with the paperwork.

Got an offer to do a no-cost refi to a 10 year fixed at 4.25% from USBank today.

I'm interested in a no-fuss, simple mortgage. Pen Fed has been great.

Vantage credit score is 990, old style is good too - around 800 I think.

Application and qualifying shouldn't be a problem. House should appraise for enough to meet their 80% LTV hurdle.

The small increase in payment will probably not be a problem.

I haven't run the numbers yet -- I will, but I'm interested in people's thoughts here.

2Cor521

[Aiming_4_55]

What about PenFed's current promotion of 5/5arm? No cost closing with today's rate of 3.25% for 5 years, then rate resets a max of another 2%. If you pay it off in 10 years, it averages just 4.125%.... save about .5% for the paperwork efforts.

You can pay 1/2 point to drop it to 3%.

Just a thought.

[thefinancebuff]

Quote:

Originally Posted by SecondCor521 Got an offer to do a no-cost refi to a 10 year fixed at 4.25% from USBank today.

Rate way too high. Get better quotes elsewhere. PenFed's rates aren't that good in fixed rate mortgages. If you are going to pay off in 10 years anyway, also consider using an ARM.

Mortgage Refinance: Don’t Overlook Adjustable Rate Mortgages (ARMs) - The Finance Buff

[chinaco]

Quote:

Originally Posted by Aiming_4_55 What about PenFed's current promotion of 5/5arm? No cost closing with today's rate of 3.25% for 5 years, then rate resets a max of another 2%. If you pay it off in 10 years, it averages just 4.125%. You can pay 1/2 to drop it to 3%. Just a thought.

If he can make the extra payment... how about the 5/5 arm (no points to lower the rate) and pay a higher payment (additional principal) to accelerate the pay-off date to 5 years (assuming there is no early penalty) before the interest reset.

IMO - you are unlikely to earn a similar return on your money by investing in some security available to you with a similar level of risk.... I would be inclined to pay the loan off and get out of debt before I FIRED.... but then again, I am a "no debt/low debt" kinda guy!

[Animorph]

0.375% of $150k is $562.50 you would roughly save the first year (ignoring the paydown). Seems worth the time you would spend doing the application. Of course look to see if you can do better, but this one would be good enough for me if truely zero cost. I have done a zero cost refi once before, and it worked fine for me.

[SecondCor521]

I've looked a little at the PenFed 5/5 ARM, and that pencils out better in my Excel spreadsheet, so thanks for that suggestion, Aiming. I don't think I'd pay the extra 1/2 point or accelerate the payments further to payoff in 5 years, but -- Lord willin' an' the crik don' rise -- I'll probably be in a position to pay it off in 5. Main drawback is that potential rate increase 5 years down the road...I don't like that idea just because it's a complexity, but it may be one worth "paying" to get the lower rate without closing costs. Hmm. Something to think about further.

2Cor521

[Aiming_4_55]

Quote:

Originally Posted by SecondCor521 ... Main drawback is that potential rate increase 5 years down the road...I don't like that idea just because it's a complexity.... 2Cor521

No sure if it's a drawback if you stick to payoff in 10 years like the US Bank re-fi that you mentioned which could save you some bucks.

Assuming 5/5arm no points and no closing cost... the first 5 years, the rate is 3.25%, years 6 - 10 max is 5.25 (maybe get lucky and the rates don't bounce up the full 2%), divide the 2 rates = 4.125% if paid off in 10 years, just a hair better than US Bank. Since it's based on a 30yr term, just figure out your payment based and make payment based on a 10yr note, you'll save more $$ as you are making bigger/extra principal payments the first 5 years.

Also as a side benefit, if something happens, you have a lower required payment than a fixed 10yr note in an emergency.

By your first post, you seem happy with PenFed so I looked at them closer.

(Full disclosure - I recently joined PenFed, but have not used any services, but researched the 5/5ARM. They are estimating a 60 day close. I am considering a re-fi but trying to figure out what I would do with the re-fi funds)

[SecondCor521]

Aiming, I think I still come out ahead dollar-wise regardless of the potential increase in rate in 5 years...my only thing is that I'm trying to simplify my financial life more, and having an ARM as opposed to a fixed is somewhat more complex. But I trust PenFed, and if it really is a 2% increase cap it's probably a good deal.

I clearly come out ahead with the 5/5, now I just need to decide if it's worth the hassle or not. PenFed was great but they subcontract out the closing/escrow stuff and I had to deal with numerous problems there when I refi'ed before.

2Cor521

[Aiming_4_55]

I've seen various feedback on PenFed.... get what you pay for services.

Each person has to decide on the hassle factor, basically how much you value your time and how organize is your paperwork.

Figure out your 10 yr pay off monthly payment amount and do automatic payments to PenFed, regardless of interest rate of 3.25 or 5.25, your monthly P&I will be covered since it's based on a 30 yr note.

Rough estimate (bad at math, do your own spreadsheet to verify) - my guess, comparing current mortgage @ 4.65 to a re-fi rate of 4.125 avg or 4.25 over 10 years, maybe $4k to $4.5 savings.

Every time they screw up, have a beer... u might still have $ left over

[HpRyder]

I finished my refi'ed at 4.5% for 30 yrs with a 6 fig cash out just after I was separated from a job last year and signed up for their free mortgage payment insurance. It kicked in and they paid the mortgage for 12 months. So you bet it was worth the 4+ month hassle.

[chinaco]

Quote:

Originally Posted by HpRyder I finished my refi'ed at 4.5% for 30 yrs with a 6 fig cash out just after I was separated from a job last year and signed up for their free mortgage payment insurance. It kicked in and they paid the mortgage for 12 months. So you bet it was worth the 4+ month hassle.

Sounds like the sequence of your description might be out of order. Sounds like you refi'd after you lost your job.

I didn't know that type of insurance would be willing to pay your mortgage if the job was lost before you bought the insurance.

[rescueme]

Quote:

Originally Posted by HpRyder ...with a 6 fig cash out...

Why?

I'm an old guy (completly debt free, along with DW - and we do own our own <retirement> home).

What's the idea of a "cash out"? Can't this equity be better used/invested that will help you long term (like - retirement?).

I don't get it (sorry)...

[Texas Proud]

Read the fine print on the 'no cost' offer... is it REALLY no cost or that they just roll the costs into the new loan


If it is NO COST (IOW the balance of the loan does not change), I would go with the lower rate for sure... it is enough money for me to sign a few docs etc....

[HpRyder]

No Chinaco. I started the refi while employed. Obama canceled the project I was on and I got laid off but kept the refi going, after all I had already paid the assessor & application fee costs. What was the worst they could do, turn me down? A month after I separated it came in.

The refi was with BOA. During the initial application they offered mortgage payment insurance, free for the first year. The events it covered, if I remember correctly, were accident & medical disability, death and unemployment. Of course I took it. They were clearly not counting on the national unemployment rate going to 9%. The insurance had a 30 day elimination period. So I took a severance package with a phased pay off over several months instead of a lump sum. I waited two or so months and activated the insurance.

Unfortunate the insurance benefit was for only 12 months total, not forever.

Rescueme, several reasons I pulled out the cash. First that’s about what I spent on house improvements when I purchased the house to make it livable. So I view the cash out as a return of my funds. The incremental monthly payment was about $100 over what the existing mortgage payment was without the cash out. Second, I’ve rarely been able to get long term money for 4.5%. I was betting, based on what was about to happen in US, that I could make substantially more investing. Then use it, plus the gains, to payoff the mortgage. So far it’s on track.

Texas Proud, it was not a no cost refi. The costs however were very, very, very low. From memory, $150 application fee, $250 assessor fee and about $150 in 5 or so loan payoff statements over the application time. Then at the end they bumped the points to 1/8 from the 0 points it started at. By that time I was very, very, very tired of calling them 3 times per day, talking to different loan processing department section managers all over the country, different underwriters in different states and different legal staff. But so far I think it was worth the effort.

[obgyn65]

Not worth the hassle IMHO.

[HpRyder]

Quote:

Originally Posted by obgyn65 Not worth the hassle IMHO.

20+K is not worth faxing 1 sheet of paper to the same fax number once per month for 12 months? You obviously have a lot more funds to spare than I.

[inquisitive]

I'm also planning on refinancing and am a few years into a 5/1 ARM, which was the only mortgage I could get at the time. Am looking to get a 15 yr, or maybe a 30 yr, fixed. What options should I consider for companies to refinance with? I am going to send in an application to the current mortgage holder but he didn't want to give rates without my application. I'm assuming this will be a hard pull and what other options should I consider? A number of people here mention Penfed, I can look into this also.

[HpRyder]

Personally inquisitive, I would get the longest term fixed interest rate loan at the
cheapest possible cost. I believe rates will be going up within a year or two. You can almost always increase payments on a 30 yr fixed rate loan to pay it off in 15 yrs, so there is no need to locked into the higher payments of a 15 yr loan.

Almost all mortgage brokers will verbally give out rates and their non-binding cost estimates. Usually they are the best possible rates which assume an ideal borrower. Most will send you a GFE, which unless you exactly meet lending criteria, are non-binding, but are FYI.

Hard pulls are only after you apply for the loan and there is a 30 day window where you can shop around and not have the pulls lower your FICO more than the first pull.

Loan brokerage informational sites are all over the web, fatwallet, bankrate, mtg professor, etc. You’ve just got to shop around hard, know the rates and get lucky.

Happy hunting & good luck.

[FUEGO]

A couple of refi's ago I went for the 10 year Home Equity Loan from Penfed at 3.99% (still being offered). I used it as a first mortgage and they didn't care. Zero closing costs, although if you repay and close it within 2-3 years, you do have to refund something smallish ($125 for me IIRC).

Just an option vs the USBank loan or at penfed with closing costs. In any event it would be financially beneficial vs the status quo of your 4.625% loan. It should save you at least a few thousand over the life of the loan, just for processing some paperwork and jumping through some hoops.

[Ronnieboy]

Anyone know who will take a Zillow estimate on a mortgage refi?

For some reason, Zillow states the value of our house is about $120k more than the last appraiser had (early in the year).